Wednesday, September 12, 2007

Ramadan Demand

During the fasting month the demand for food actually rises. Fasting takes place during the daylight hours. Iftar, the daily breaking of the fast at sundown, is a festive event. In homes families gather for large meals that have been under preparation all day. Restaurants offer buffets to serve the crowds at Iftar. I'm speculating, but my guess is that demand rises through a combination of celebration and the inevitable waste of dealing with feeding a crowd all at once.

We see signs of the increase in demand through the government appeals to food retailers and wholesalers to not increase prices. Some examples in today's news:

Gulf News:
Oman's Minister of Commerce and Industry Maqbool Bin Ali Sultan on Sunday exhorted traders in the country to control spiralling prices of essential commodities, especially in light of advent of the holy month of Ramadan.

During a meeting with the suppliers, traders and shop owners, the Minister explored means to controlling the price rise.

"Refrain from increasing prices of essentials during Ramadan," he told the gathering at the Ministry of Commerce and Industry auditorium.
He said there was no need for prior approval from the ministry for offering discounts at supermarkets and hypermarkets during the Holy Month of Ramadan.
Just why you would have to seek prior approval to cut prices at other times? My guess is this is a way of protecting locally-owned shops. [Update - Muscati offers another explanation based on observation rather than guess. See the comments.]

Gulf News:
Abu Dhabi: The Ministry of Economy has taken a number of steps to rein in prices during Ramadan, an official statement said yesterday.

The ministry will tighten its control and intensify campaigns to curb shop owners from exploiting the demand during the fasting month, said the statement, carried by WAM.

The ministry's Consumer Protection Department held meetings to discuss measures "to prevent the manipulation of prices and curb unjustified increase in the prices of basic commodities and foodstuff," it said.
Arab News:
The price hikes come with the advent of Ramadan when Saudis and expatriates purchase large quantities of foodstuffs. Supermarkets and grocery shops across the Kingdom have been filled with Ramadan shoppers.

According to one survey, Saudis believe that the Ministry of Commerce and Industry has failed to deal with the crisis. They feel that the crisis has gone out of control with prices of essential commodities, including rice, milk, fruits and vegetables increasing everyday.
Economists would say its merely supply and demand at work. The higher prices signal cost. As shops with customers it becomes more costly to serve them.



Blogger muscati said...

In Oman stores are only allowed to have two sales a year plus one more with special approval. This stupid law was made in the 80's when people used to complain that shops increase their prices and then announce huge sales which bring prices back to the original prices. In order to stop that our Ministry of Commerce came out with a law in which businesses have to apply to the ministry for a permit to hold a sale and submit the prices of all the items which will be on sale with price before and after the sale indicated. However, this law doesn't require any proof that the original price isn't tampered. It's stupid. It doesn't work. It's totally useless. Businesses should be allowed to have as many sales promotions as they want. And if they are not really reducing prices then people should stop buying from them.

10:17 PM  
Anonymous Anonymous said...

Yed, there is more demand in Ramadhan as people distribute cooked dishes to their neighbours and have more family gatherings during this time. The reason the shop keepers are being ask to not raise prices is because it is Ramadhan, and a month of charity and kindness. Salaries are mostly dorment and the standard of living is always increasing, plus petrol and other things such as health and education. Therefore, the consumers can only handle so much. If you go deeper into the demand and supply thing, you will find that quality products are not always sold too and are not worth the asking prices. There is a lot of cheating regarding the quality of the end product reaching the consumer. For, example; what is on a rice sack (product name) may not be exactly what it is inside. It could be another brand. I know this from experience of buying over the years. Really consumers are being ripped off in many ways. Far & south Asian sales people are not trust worthy regarding their goods.

6:08 PM  

Post a Comment

Links to this post:

Create a Link

<< Home